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PROVIDING BUSINESS SOLUTIONS
THAT MAXIMIZE VALUE
Distributor (Wholesale & Retail)
– Recreation Clothing and
Related Products.
DWA delivers strategic assessment and plan to maximize company value.
Situation
A specialty retail and wholesale
distributor of foreign and
domestic produced clothing and
other products was experiencing
large losses and severe erosion
of value. As a result, the
company was transferred to the
special assets group of its
senior lender. The firm and its
bank requested that DWA analyze
the business including related
real estate, other tangible
assets, and intellectual
property, and develop a plan to
exit the banking relationship in
a manner that would produce
maximum value.
Proposal
DWA proposed to assist the
company in the development of a
plan for the exit from its
relationship with its senior
lender in a manner that
maximized value. Further, DWA
proposed to assist the company
with the development of a
useable cash flow forecast,
provide an assessment of the
value of the company’s tangible
and intangible assets, and
provide general advice regarding
its strategic and tactical
options.
Deliverable
DWA performed an assessment of
the company and delivered to the
company and its senior lender a
plan to exit the relationship in
a manner that maximized the
value of the enterprise.
Furthermore, DWA provided a
detail cash flow forecast that
would be used to measure
progress against that plan upon
its acceptance and
implementation. The plan was
accepted by the company and the
bank, with the bank assuming
joint responsibility for plan
implementation.
Manufacturer and Wholesaler –
Automotive Aftermarket
Systems and process planning from DWA eliminates service problems and cuts costs.
Situation
A profitable automotive
aftermarket manufacturer and
wholesaler began experiencing
significant declines in service
levels after the consolidation
of two distribution facilities.
DWA was asked to evaluate the
situation, provide advice as to
remedies, and then assist with
the implementation of those
remedies.
Proposal
DWA proposed to provide advice
and assistance in the
development and implementation
of a plan to resolve the
performance concerns and put in
place processes and systems that
would sustain the improvements.
The objectives were to reduce
cost while improving service
levels through developing and
documenting operating plans,
improving operations
organization, employing problem
solving methodologies,
developing and monitoring
performance metrics, and
training related management and
operations personnel.
Deliverable
Service levels improved
substantially while at the same
time, reducing labor cost in
overtime and headcount.
Effective systems were
established and documented. Key
performance measures were
identified, tracked, and
resources deployed as needed to
address concerns as they became
known. Operations were
reorganized, morale improved and
productivity increased. Of
particular importance is that
these changes were understood
and adopted by the client so
that the improvements can be
sustained.
Manufacturer – Recreation
Products
DWA provides management and operations support in a crisis situation.
Situation
A manufacturer and distributor
of recreational products was
experiencing severe losses and
erosion of value. Although gross
revenues remained strong,
significant changes in product
mix combined with poor financial
and product cost information
resulted in management being
slow to identify the causes and
solutions for the problem. DWA
was asked to advise the company
through the crisis, including
devising solutions that would
provide the most value to
existing stakeholders.
Proposal
DWA proposed to provide advice
and assistance with the
implementation of a number of
management and operations
changes precipitated by the
severity of the situation. DWA
also proposed to provide advice
and assistance in communicating
with the company’s senior
lender. Finally, DWA proposed to
assist with initiatives to
refinance and recapitalize the
company, or if those initiatives
were unsuccessful, assist with
discontinuing operations and
liquidating.
Deliverable
Due to the severity of the
situation and in order to
preserve value, following DWA’s
advice, a decision was made to
temporarily discontinue
operations while seeking an
expedited sale or
recapitalization. During a
period of approximately one and
one-half months, DWA advised the
company through a process that
included:
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the identification of
parties that were qualified,
credible, and who may have
an interest in providing a
financial solution, and who
also had the ability to
dedicate the necessary
resources to reach an
agreement and close in a
timeframe that preserved the
value of the enterprise,
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contacting each of those
interested parties,
describing the situation,
and responding to initial
inquiries,
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providing requested due
diligence information and,
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negotiating with those
parties who continued to
demonstrate interest and
ability to timely close a
transaction that would meet
the expectations of the
varying stakeholders.
Through this process, the
company agreed to the sale of
its assets to a competitor, a
solution that provided
considerably more value than
liquidation.
Distressed Business
DWA delivers timely and effective wind-down and liquidation services.
Situation
A metal forming and
fabricating company had
experienced severe declines in
revenues over a short period of
time due to the termination or
loss of parts production
programs, and had been
unsuccessful in securing
replacement programs. The
result was rapid and acute
balance sheet erosion and cash
consumption such that working
capital would be unavailable to
meet payroll and other normal
operating expenditures --
without an immediate remedy.
The situation was further
complicated by weak financial
management and poor management
information quality and
availability. Referred to DWA
through its bank, the company
was seeking advice and
assistance in maximizing or
preserving value through the
timely development and
implementation of a workable
exit strategy.
Deliverable
DWA
developed a detailed financial
and operating plan to wind down
the business operations over a
90 day period. The plan
included plans to maximize cash
generation during the wind down
by managing customer relations,
inventory, personnel, and
creditor relations. The plan
also included the securing of
successor suppliers for the
transfer of tooling, programs,
inventory, designs, intellectual
property, and book of business
in a manner that maximized value
to the estate. A step-by-step
action plan was developed, along
with a detailed cash management
plan, all of which was
communicated to company
ownership, management, bank, and
other key stakeholders.
DWA was
engaged to assist with the
implementation of that plan,
which also involved the
collection of accounts
receivable, conversion or sale
of inventory, transition of
personnel including related
issues of fringe benefit plans
and employee communications, and
then the sale of all personal
and real property. DWA was also
responsible for the regular and
ongoing communication with the
bank, unsecured creditors, and
other key stakeholders regarding
plan performance.
Fast
Business Growth Contributes to
Severe Cash Constraints
DWA
helps solve complex working
capital challenge.
Situation
Rapid growth, combined with a
recent acquisition, created cash
flow constraints for a consumer
goods distributor. The
situation was made more acute by
the company’s expansion of
facilities and equipment,
difficulties in collecting
accounts receivable, challenging
customer and creditor payment
terms, and other seasonal
business issues. Referred to DWA
by the company’s bank, the
company was seeking advice and
assistance with the development
and implementation of cash flow
and financial forecasting models
that would allow it to evaluate
immediate and near-term sources
and uses of cash, anticipate
financing required to support
forecasted sales and operating
activities, and improve related
business decisions.
Deliverable
DWA designed,
developed, and assisted in the
implementation of two unique
forecasting (budgeting) models
for the client. The models were
established to improve
management decision making and,
thereby, improve business
performance. Given immediate
and near-term cash constraints,
DWA first created a rolling
13-week cash flow forecast, and
then created a rolling 12 to
24-month operations and cash
flow forecast (budget). The
rolling 13-week cash flow
forecast was for use in
evaluating immediate and
near-term cash management
decisions. The rolling 12 to
24-month forecast was for
evaluating immediate and
near-term business decisions.
DWA completed the forecasting
models and assisted in their
implementation, maintenance and
ongoing use in improving
decision making. Relationships
improved with the company’s
bank, customers, and creditors,
primarily because the company
was able to make and meet its
financial commitments with
increased confidence and
reliability. The company
continued to grow and create
additional value through
improved management of its
working capital, including
negotiating new arrangements
with customers and creditors.
Closely Held Business
Client benefits from DWA transition planning expertise.
Situation
A successful, closely-held business was looking for advice and assistance in the development and implementation of a plan to position the company for a future sale. Owners wished to address several issues they thought might result in a low valuation relative to historical performance or make it difficult to secure a credible buyer. More specifically, owners were concerned about 1) the company’s dependence on them as leaders and managers, 2) reliance on relationships established by the owners with key customers, 3) the resulting concentration of revenues with those key customers, and 4) an inadequate management and information systems infrastructure. The owners recognized these issues needed to be remedied if they were to achieve their economic expectations in a sale, but they did not possess the time or experience to address them.
Deliverable
DWA performed an extensive assessment of the business. Based on the assessment, DWA developed a comprehensive plan for the transfer of management and ownership of the business. The plan included a number of management changes impacting financial, management information, organizational, and other business disciplines. Changes were to be implemented over a 3 to 5-year period, and would position the company so future buyers or investors would perceive the value of the firm to be the result of the strength of the on-going business rather than dependent on the exiting business owners. DWA will provide ongoing advice and support, including interim financial and IT management, as the plan is being implemented.
DWA also collaborated with the company’s legal counsel, CPA, bank, and other business advisors in the development of the ownership succession portion of the plan. Going forward, DWA will continue to provide advice and assistance, in collaboration with those advisors, as the plan is being implemented.
Original Equipment Manufacturer
DWA delivers expert assessment and advice with OEM distribution network challenge.
Situation
A distributor for an original equipment manufacturer (OEM) was underperforming and was at risk of insolvency. This posed a potential crisis for the OEM in the market served by the distributor. The OEM was concerned about its eroding market share in the markets served by the distributor, and its ability to collect amounts owed by the distributor. The OEM was seeking assessment and advice regarding the reasons for the poor performance, as well as recommendations for possible remedies. The OEM requested a detailed plan for performance turnaround of the distributor, a detailed plan for affecting a sale of the distributor to a qualified operator, and an evaluation of the likelihood of success for each option. Once a course of action was chosen, the OEM was looking for assistance with the implementation of the plan.
Proposal
DWA performed an extensive assessment of the distributor. From that assessment, DWA drew conclusions and made recommendations to the OEM as to its options. DWA developed and presented a detailed plan for the performance turnaround of the distributor, as well as a detailed plan for affecting the sale of the distributor. For each plan, DWA provided information regarding the related risks and likelihood for success.
The OEM opted to proceed with the implementation of the plan to affect a sale of the distributor and DWA was engaged to assist in that process. DWA assisted with the development of supporting documentation and with other information for an offering memorandum. Following actions taken by the OEM to gain control of the operations of the distributor and secure a buyer, DWA was further engaged to provide interim management support and assistance to the buyer with its due diligence and management transition.
Original Equipment Manufacturer
DWA provides supply chain assistance.
Situation
A supplier for an original equipment manufacturer (OEM) was experiencing difficulty meeting the OEM’s expectations for quality and on-time/complete delivery. The relationship was increasingly hostile, which was causing breakdowns in communication that were intended to remedy the situation. The supplier was considered critical to the OEM production process so the OEM was willing to engage an independent third party to evaluate the supplier, determine the root causes for the performance difficulties, and recommend solutions.
Deliverable
DWA performed an extensive assessment of the supplier and its interfaces with the OEM. From that assessment, DWA drew conclusions as to the causes of the poor performance and made a number of specific recommendations to improve performance and relations between the two businesses. DWA concluded that in order to improve performance (quality and on-time delivery), both the OEM and the supplier would be required to make a number of changes to the way they interfaced -- from how orders were placed and how inventory was controlled, to how non-performance was defined, measured and reported. DWA also concluded that if the parties were to be successful with the implementation of the recommended operations changes, they needed to invest time in rebuilding the mutual trust, respect, collaboration, and cooperation that had been deteriorating for several years.
DWA was then engaged to initiate the implementation process, including recommended relationship- rebuilding initiatives, operations changes, and performance measures. The OEM and supplier subsequently agreed to continue working through the changes on their own, consistent with the DWA recommendations.
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